Posts
Drug Decriminalization Policy Pays Off | Glenn Greenwald | Cato Institute: Commentary: "By any metric, Portugal's drug-decriminalization scheme has been a resounding success. Drug usage in many categories has decreased in absolute terms, including for key demographic groups, like 15-to-19-year-olds. Where usage rates have increased, the increases have been modest — far less than in most other European Union nations, which continue to use a criminalization approach.
Portugal, whose drug problems were among the worst in Europe, now has the lowest usage rate for marijuana and one of the lowest for cocaine. Drug-related pathologies, including HIV transmission, hepatitis transmission and drug-related deaths, have declined significantly.
Beyond the data, Portugal's success with decriminalization is illustrated by the absence of political agitation for a return to criminalization. As one might expect for a socially conservative and predominantly Roman Catholic country, the decriminalization proposal sparked intense controversy a decade ago."
"First, when a government threatens to turn drug users into criminals, a wall of fear divides officials and the citizenry and, thus, prevents effective treatment and education campaigns. Portugal's top drug official has said the stigma created by criminalizing drug use and the resulting fear of government were the biggest barriers to effective education and treatment programs in the 1990s.
Second, treating drug addiction as a health issue, not a criminal offense, means the right solutions can be found. Counseling is far more effective than prison in turning addicts into nonusers.
Third, when a government no longer spends inordinate amounts of money on arresting, prosecuting and imprisoning drug users, that money can instead be used on highly effective treatment programs, as well as services, like methadone clinics, to limit drug-related harms."
Friday, October 29, 2010
Are the Austrians Too Harsh? - John P. Cochran - Mises Daily
Are the Austrians Too Harsh? - John P. Cochran - Mises Daily: "The Journal, then, granting NBER's chronology, contrasts the current recession and 'recovery' with the almost equally long (16 months) and severe (unemployment peaked above 11 percent) recession of July 1981–November 1982 and subsequent recovery. Their conclusion is that the different policy circumstances significantly explain the drastically different recovery paths: following the trough in late 1982, the economy rapidly surpassed the prerecession levels of output. But currently, nearly 15 months past the trough, our economy is still significantly below prerecession levels."
Happy Birthday, Bank Bailout! | Mark A. Calabria | Cato Institute: Commentary
Happy Birthday, Bank Bailout! | Mark A. Calabria | Cato Institute: Commentary: "An admittedly unscientific but useful first approximation of any government program is to ask, did such program change an underlying trend? One of the rationales offered for TARP was that it would 're-start' our credit markets. If TARP did help the credit markets, then its impact should show up in the amount of credit outstanding.
However, consumer credit peaked several months before the creation of TARP and seemingly continued a relatively smooth trend downward. Would that trend have been worse without TARP? Maybe. But since it appears that the trend did not change much at all, I believe the burden is on the program's proponents to prove it did.
Another objective of TARP was to 'restore confidence.' The idea was that if the American public and the financial markets saw that the government would do and spend whatever was necessary, calm would return. Interestingly enough, the first consumer confidence reading after TARP passed was lower than the measure taken just before its signing. While consumer confidence did start to improve in the beginning of 2009, one would have expected TARP's impact on confidence to have been felt sooner rather than later.
The statutory language of TARP repeated talk about protecting homeownership, home values, and jobs. One need not reproduce charts for these variables. We all know how weak they have been. This of course should not really be a surprise. TARP did nothing to change the fundamentals of supply and demand in the housing market, or in the labor market."
"despite TARP's goal of cleaning the banking system of bank assets, there are more bad assets than ever. While TARP, of course, did not cause those bad assets, it was supposed to reduce them.
The real costs of TARP are likely not going to be felt for years, until the next financial crisis. In rescuing the financial system, TARP has created the expectation that in a moment of crisis, the government will throw money at the problem, reducing the incentive of market participants to reduce their own risk exposures."
However, consumer credit peaked several months before the creation of TARP and seemingly continued a relatively smooth trend downward. Would that trend have been worse without TARP? Maybe. But since it appears that the trend did not change much at all, I believe the burden is on the program's proponents to prove it did.
Another objective of TARP was to 'restore confidence.' The idea was that if the American public and the financial markets saw that the government would do and spend whatever was necessary, calm would return. Interestingly enough, the first consumer confidence reading after TARP passed was lower than the measure taken just before its signing. While consumer confidence did start to improve in the beginning of 2009, one would have expected TARP's impact on confidence to have been felt sooner rather than later.
The statutory language of TARP repeated talk about protecting homeownership, home values, and jobs. One need not reproduce charts for these variables. We all know how weak they have been. This of course should not really be a surprise. TARP did nothing to change the fundamentals of supply and demand in the housing market, or in the labor market."
"despite TARP's goal of cleaning the banking system of bank assets, there are more bad assets than ever. While TARP, of course, did not cause those bad assets, it was supposed to reduce them.
The real costs of TARP are likely not going to be felt for years, until the next financial crisis. In rescuing the financial system, TARP has created the expectation that in a moment of crisis, the government will throw money at the problem, reducing the incentive of market participants to reduce their own risk exposures."
Shattered Dreams: Homeowner Protection - FoxNews.com
Shattered Dreams: Homeowner Protection - FoxNews.com: "Judge Lippman developed a new procedure requiring attorneys to sign a form confirming that they have personally reviewed the paperwork, including a loan file where a client, the lender, is claiming a homeowner is behind on their payments and in default. Without this document included in a court file, a foreclosure action can no longer be filed in New York."
Thursday, October 28, 2010
We Can't Afford the Luxury of High-speed Rail | Randal O'Toole | Cato Institute: Commentary
We Can't Afford the Luxury of High-speed Rail | Randal O'Toole | Cato Institute: Commentary: "At an inflation-adjusted cost of about $450 billion paid out of highway user fees, the Interstate Highway System, to which high-speed rail is sometimes compared, provides more than 4,000 miles of passenger travel for every American, miles that Americans were not traveling before the system was built. By comparison, a $600 billion expenditure on high-speed rail will provide, at best, around 300 miles of travel per person."
"Amtrak brags that its high-speed Acela between Boston and Washington covers its operating costs, though not its capital costs. It does so, however, only by collecting fares of about 75 cents per passenger mile. By comparison, airline fares average only 13 cents a passenger mile, and intercity buses (which, Amtrak doesn't want you to know, carry about three times as many passengers between Boston and Washington as the Acela) are even less expensive."
"Since most high-speed rail stations will be in downtowns, the main users will be downtown workers such as lawyers, bankers, and government officials. Yet less than 8% of American jobs are in central city downtowns, meaning all Americans will subsidize trains used by only a small urban elite."
"Amtrak brags that its high-speed Acela between Boston and Washington covers its operating costs, though not its capital costs. It does so, however, only by collecting fares of about 75 cents per passenger mile. By comparison, airline fares average only 13 cents a passenger mile, and intercity buses (which, Amtrak doesn't want you to know, carry about three times as many passengers between Boston and Washington as the Acela) are even less expensive."
"Since most high-speed rail stations will be in downtowns, the main users will be downtown workers such as lawyers, bankers, and government officials. Yet less than 8% of American jobs are in central city downtowns, meaning all Americans will subsidize trains used by only a small urban elite."
Grading the Governors | Chris Edwards | Cato Institute: Commentary
Grading the Governors | Chris Edwards | Cato Institute: Commentary: "As the Republican Nevada Gov. Jim Gibbons said in opposing tax hikes, 'It's not the role of the state government to put people out of work.'
Another troubling trend is the spread of 'tax credit disease.' Most states offer dozens of narrow tax breaks to favored activities. For example, more than 40 states offer film production incentives — favoring Hollywood jobs over, say, manufacturing."
Another troubling trend is the spread of 'tax credit disease.' Most states offer dozens of narrow tax breaks to favored activities. For example, more than 40 states offer film production incentives — favoring Hollywood jobs over, say, manufacturing."
Wednesday, October 27, 2010
The Twofold Roots of the Great Depression: Inflationism and Intervention - Lionel Robbins - Mises Daily
The Twofold Roots of the Great Depression: Inflationism and Intervention - Lionel Robbins - Mises Daily: "If for some reason there is more money than usual available and business conditions look favorable, it is surely not difficult to see that investors and business men may be led to make mistakes — to launch out new undertakings that can only be carried on satisfactorily if these easy-money conditions are going to last."
Friday, October 22, 2010
Don't Cap Microfinance Lending Rates | Swaminathan S. Anklesaria Aiyar | Cato Institute: Commentary
Don't Cap Microfinance Lending Rates | Swaminathan S. Anklesaria Aiyar | Cato Institute: Commentary: "Charging poor people 30% interest sounds terrible. ... Is this unwarranted loot? Not at all, say the poor. They clamour for more such loans, and repayment rates exceed 99%, suggesting the interest rates are affordable."
"Compartamos in Mexico lends at up to 100%, yet borrowers repay. How so? An annual rate of interest is meaningless for businesses with a daily churn. A vegetable vendor borrows Rs 300 to buy vegetables wholesale, selling these for Rs 450. Even if he pays 100% per year interest on his loan of Rs 300, it amounts to just 90 paise/day, a negligible portion of his profits.
Many poor Indians use MFI loans to pay off moneylenders. An MFI loan at 30% to pay off a moneylender's loan at 100% is a blessing."
"But new MFIs lose money for years before breaking even at 36% interest. Weekly meetings with clients are expensive but inescapable: this enforces group solidarity and loan discipline. As loans rise from Rs 5,000 to Rs 15,000, operating costs fall and interest rates can be cut. When MFIs make large business loans with monthly rather than weekly repayments, then too interest rates can be cut. In semi-urban areas a single agent can handle 1,000 clients a week, but in remote areas no agent can handle over 200 clients, and that's costly."
"Compartamos in Mexico lends at up to 100%, yet borrowers repay. How so? An annual rate of interest is meaningless for businesses with a daily churn. A vegetable vendor borrows Rs 300 to buy vegetables wholesale, selling these for Rs 450. Even if he pays 100% per year interest on his loan of Rs 300, it amounts to just 90 paise/day, a negligible portion of his profits.
Many poor Indians use MFI loans to pay off moneylenders. An MFI loan at 30% to pay off a moneylender's loan at 100% is a blessing."
"But new MFIs lose money for years before breaking even at 36% interest. Weekly meetings with clients are expensive but inescapable: this enforces group solidarity and loan discipline. As loans rise from Rs 5,000 to Rs 15,000, operating costs fall and interest rates can be cut. When MFIs make large business loans with monthly rather than weekly repayments, then too interest rates can be cut. In semi-urban areas a single agent can handle 1,000 clients a week, but in remote areas no agent can handle over 200 clients, and that's costly."
How much the bailouts will cost, at a glance - FoxNews.com
How much the bailouts will cost, at a glance - FoxNews.com: "Federal housing regulators on Thursday provided a broad estimate of just how much the bailout of mortgage buyers Fannie Mae and Freddie Mac will end up costing taxpayers: up to $259 billion.
That's far more expensive than the government's bailouts of the banks, auto companies and insurance giant American International Group Inc. Those efforts under the $700 billion Troubled Asset Relief Program, or TARP, may cost the taxpayers $51 billion"
That's far more expensive than the government's bailouts of the banks, auto companies and insurance giant American International Group Inc. Those efforts under the $700 billion Troubled Asset Relief Program, or TARP, may cost the taxpayers $51 billion"
Thursday, October 21, 2010
Drugs and Conservatives Should Go Together | Jeffrey A. Miron | Cato Institute: Commentary
Drugs and Conservatives Should Go Together | Jeffrey A. Miron | Cato Institute: Commentary: "Drug prohibition is hard to reconcile with constitutionally limited government. The Constitution gives the federal government a few expressly enumerated powers, with all others reserved to the states (or to the people) under the 10th Amendment. None of the enumerated powers authorizes Congress to outlaw specific products, only to regulate interstate commerce. Thus, laws regulating interstate trade in drugs might pass constitutional muster, but outright bans cannot. Indeed, when the United States wanted to outlaw alcohol, it passed the 18th Amendment. The country has never adopted such constitutional authorization for drug prohibition."
"Yes, drugs can harm innocent third parties, but so can — and do — alcohol, cars and many other legal products. Consistency demands treating drugs like these other goods, which means keeping them legal while punishing irresponsible use, such as driving under the influence.
Legalization would take drug control out government's incompetent hands and place it with churches, medical professionals, coaches, friends and families. These are precisely the private institutions whose virtues conservatives extol in other areas."
"Yes, drugs can harm innocent third parties, but so can — and do — alcohol, cars and many other legal products. Consistency demands treating drugs like these other goods, which means keeping them legal while punishing irresponsible use, such as driving under the influence.
Legalization would take drug control out government's incompetent hands and place it with churches, medical professionals, coaches, friends and families. These are precisely the private institutions whose virtues conservatives extol in other areas."
Five noteworthy aspects of Britain's tough spending plan - Policing, prisons - CSMonitor.com
Five noteworthy aspects of Britain's tough spending plan - Policing, prisons - CSMonitor.com: "The Home Office, which handles policing, will swallow a 6 percent cut each year for the next four years"
Compounded, that is a 22% cut!
Compounded, that is a 22% cut!
Wednesday, October 20, 2010
Curb Medicare Spending the Ryan Way | Michael F. Cannon | Cato Institute: Commentary
Curb Medicare Spending the Ryan Way | Michael F. Cannon | Cato Institute: Commentary: "experience and public choice theory suggest that the Ryan plan has a better shot at reducing future Medicare outlays than past efforts, because the Roadmap would change the lobbying game that fuels Medicare's growth.
Medicare dictates the prices it pays clinicians, facilities, medical suppliers and private health plans through more than a dozen different price-control schemes. Efforts to reduce those prices typically fail because of what Tom Daschle calls the 'patient-provider pincer movement': Medicare enrollees and health care providers join forces to undo those cuts.
Each producer that depends on Medicare for its income faces an enormous incentive to lobby for higher prices. The prices for, say, hospital services could make or break a lot of hospitals. And if the hospitals don't lobby to increase those prices, who will? Enrollees like the easy access to medical care that comes with higher Medicare spending."
"The Roadmap, in contrast, would substantially diminish each producer group's incentive to lobby for greater subsidies."
"If hospitals lobby for a higher voucher growth rate, how will they know that the added subsidies will come back to them, rather than ambulatory surgical centers? Many groups would just free-ride on the lobbying efforts of other groups."
"A voucher system would also put downward pressure on prices across the entire spectrum of care."
"Seniors spend their Social Security checks on lots of things, but we don't see golf courses or metal-detector manufacturers lobbying to increase Social Security spending the way health care providers lobby to increase Medicare spending. This largely explains why, on a per-capita basis, Social Security outlays grow at roughly the rate of the economy, while Medicare outlays grow about 2 percentage points faster."
"Vouchers are the most plausible way to restrain Medicare spending. They are also the most humane way, because they let enrollees retain the benefits that mean the most to them."
Medicare dictates the prices it pays clinicians, facilities, medical suppliers and private health plans through more than a dozen different price-control schemes. Efforts to reduce those prices typically fail because of what Tom Daschle calls the 'patient-provider pincer movement': Medicare enrollees and health care providers join forces to undo those cuts.
Each producer that depends on Medicare for its income faces an enormous incentive to lobby for higher prices. The prices for, say, hospital services could make or break a lot of hospitals. And if the hospitals don't lobby to increase those prices, who will? Enrollees like the easy access to medical care that comes with higher Medicare spending."
"The Roadmap, in contrast, would substantially diminish each producer group's incentive to lobby for greater subsidies."
"If hospitals lobby for a higher voucher growth rate, how will they know that the added subsidies will come back to them, rather than ambulatory surgical centers? Many groups would just free-ride on the lobbying efforts of other groups."
"A voucher system would also put downward pressure on prices across the entire spectrum of care."
"Seniors spend their Social Security checks on lots of things, but we don't see golf courses or metal-detector manufacturers lobbying to increase Social Security spending the way health care providers lobby to increase Medicare spending. This largely explains why, on a per-capita basis, Social Security outlays grow at roughly the rate of the economy, while Medicare outlays grow about 2 percentage points faster."
"Vouchers are the most plausible way to restrain Medicare spending. They are also the most humane way, because they let enrollees retain the benefits that mean the most to them."
Time as a Price - Predrag Rajsic - Mises Daily
Time as a Price - Predrag Rajsic - Mises Daily: "A recent study has shown that in most of [Canadian emergency rooms] the average wait time exceeds 6 hours and sometimes reaches up to 23 hours."
"constantly full waiting rooms are not an unavoidable fact of life but a product of a 'priceless' supply system, where waiting for service acts as a rationing substitute for the market price."
"Most people have some mild health-related problem most of the time, but it would not be worth it to them to wait for six hours to receive treatment. They might, however, be willing to wait 20 or 30 minutes or even an hour. The wait time is the only price they pay for the service, but if the price is too high, these people will choose not to use the service offered by the healthcare provider.
However, there are always a small number of people that would be willing to wait six or more hours because the value they put on their particular health problem is quite high. Generally, as the wait time decreases, the number of people willing to wait increases. For example, in our city of 300,000 people, I would expect far more than 5 (or even 30) persons per hour coming into the emergency waiting room if they had to wait only five minutes to receive a service and not provide any money in return."
"While paying for a service with money represents an exchange of claims over resource ownership, paying for the same service with time represents outright resource destruction. The time spent in waiting is lost forever and cannot be used in any productive activity, whereas the money paid for service could be used for purchasing goods and services that had already been produced. The time not spent in waiting could be used for the production of new resources."
"constantly full waiting rooms are not an unavoidable fact of life but a product of a 'priceless' supply system, where waiting for service acts as a rationing substitute for the market price."
"Most people have some mild health-related problem most of the time, but it would not be worth it to them to wait for six hours to receive treatment. They might, however, be willing to wait 20 or 30 minutes or even an hour. The wait time is the only price they pay for the service, but if the price is too high, these people will choose not to use the service offered by the healthcare provider.
However, there are always a small number of people that would be willing to wait six or more hours because the value they put on their particular health problem is quite high. Generally, as the wait time decreases, the number of people willing to wait increases. For example, in our city of 300,000 people, I would expect far more than 5 (or even 30) persons per hour coming into the emergency waiting room if they had to wait only five minutes to receive a service and not provide any money in return."
"While paying for a service with money represents an exchange of claims over resource ownership, paying for the same service with time represents outright resource destruction. The time spent in waiting is lost forever and cannot be used in any productive activity, whereas the money paid for service could be used for purchasing goods and services that had already been produced. The time not spent in waiting could be used for the production of new resources."
Death-wish Democrats | Richard W. Rahn | Cato Institute: Commentary
Death-wish Democrats | Richard W. Rahn | Cato Institute: Commentary: "The average deficit when the Democrats were in control was 4.4 percent of gross domestic product (GDP), 3.9 percent when control was split and only 1 percent when the Republicans were in charge."
Tuesday, October 19, 2010
Big fans put 2 houses to hurricane-force wind test - FoxNews.com
Big fans put 2 houses to hurricane-force wind test - FoxNews.com: "The conventional house in the test was built to the standard required in the Midwest. Houses in coastal areas would typically have more reinforced construction"
So the test wasn't very useful -- it didn't compare what is normally used on the coast.
So the test wasn't very useful -- it didn't compare what is normally used on the coast.
GOP 'Pledge' Lacks Both Cuts and Courage | Gene Healy | Cato Institute: Commentary
GOP 'Pledge' Lacks Both Cuts and Courage | Gene Healy | Cato Institute: Commentary: "Should Republicans recapture the House, they promise to cut an unspecified $100 billion from a $3.8 trillion federal budget in 2011."
"one of the Pledge's architects wouldn't name a single program he'd cut, even in nondefense discretionary spending."
"one of the Pledge's architects wouldn't name a single program he'd cut, even in nondefense discretionary spending."
Regulators Have Learned Nothing from the Financial Crisis | Mark A. Calabria | Cato Institute: Commentary
Regulators Have Learned Nothing from the Financial Crisis | Mark A. Calabria | Cato Institute: Commentary: "The favoring, if not actual subsidizing, of sovereign and mortgage debt not only remains, but is expanded, under Basel III.
It is no coincidence that these are also the markets that have suffered the most disruptions and required the largest bailouts. Any framework that treats debt issued by entities such as Fannie Mae and Greece as essentially risk-free is a framework that cannot be taken seriously."
It is no coincidence that these are also the markets that have suffered the most disruptions and required the largest bailouts. Any framework that treats debt issued by entities such as Fannie Mae and Greece as essentially risk-free is a framework that cannot be taken seriously."
Tax Cuts and Revenue: What We Learned in the 1980s | Richard W. Rahn | Cato Institute: Commentary
Tax Cuts and Revenue: What We Learned in the 1980s | Richard W. Rahn | Cato Institute: Commentary: "The Reagan tax-rate reductions did, in fact, pay for themselves — but it took about seven years."
"In the 30-year period from 1970 to 2000, the maximum tax rate on individual income ranged from 28% to 70%, yet individual tax revenue as a percentage of GDP ranged from a low of 7.6% (when the maximum rate was 70%) to a high of 9.6%. Total tax revenues ranged from a low of 17.1% of GDP to a high of 19.8% during that same 30 years. Over the long run (seven years or more), individual federal tax rates not exceeding 25% or so would probably maximize federal tax revenues"
"Their analyses show that increasing the capital-gains tax rate would result in lower tax revenue and higher deficits. The studies are also congruent with the historical experience of the last 40 years.
The official government tax revenue and economic forecast models are still largely Keynesian static models, rather than dynamic; they do not capture most of the incentive and long-term effects of tax-rate changes. As a result, they give the wrong answers. These models missed the revenue gains from the 1978 and 1997 capital-gains rate cuts. They missed the economic gains from the Reagan-era tax cuts. Most recently, they spectacularly failed in their employment, tax revenue and economic growth forecasts from the Obama 'stimulus' program."
"In the 30-year period from 1970 to 2000, the maximum tax rate on individual income ranged from 28% to 70%, yet individual tax revenue as a percentage of GDP ranged from a low of 7.6% (when the maximum rate was 70%) to a high of 9.6%. Total tax revenues ranged from a low of 17.1% of GDP to a high of 19.8% during that same 30 years. Over the long run (seven years or more), individual federal tax rates not exceeding 25% or so would probably maximize federal tax revenues"
"Their analyses show that increasing the capital-gains tax rate would result in lower tax revenue and higher deficits. The studies are also congruent with the historical experience of the last 40 years.
The official government tax revenue and economic forecast models are still largely Keynesian static models, rather than dynamic; they do not capture most of the incentive and long-term effects of tax-rate changes. As a result, they give the wrong answers. These models missed the revenue gains from the 1978 and 1997 capital-gains rate cuts. They missed the economic gains from the Reagan-era tax cuts. Most recently, they spectacularly failed in their employment, tax revenue and economic growth forecasts from the Obama 'stimulus' program."
Six Months Later... | Michael F. Cannon | Cato Institute: Commentary
Six Months Later... | Michael F. Cannon | Cato Institute: Commentary: "ven before the price controls affecting children took effect today, major insurers Wellpoint, Cigna, Aetna, Humana and CoventryOne announced they will simply stop writing child-only policies rather than suffer the inevitable losses. Thanks to this 'consumer protection,' many parents will be unable to insure their children. Expect other insurers to follow suit as adverse selection causes premiums for existing child-only policies to rise.
When those price controls go marketwide in 2014, they will force insurers to avoid sick adults as well. Economists have shown that unless insurers avoid the sick, the price controls will put them out of business. Look for insurers to avoid, mistreat and dump the sick by marketing themselves only to healthy people, skimping on claims processing and customer service, and dropping benefits that sick people value — not because insurers are heartless, but because that is what Obamacare rewards.
The law's authors admitted as much when they included new subsidies and regulations (on marketing, claims payments and benefit design) to mitigate those perverse incentives."
"For example, three years before they even take effect, the marketwide price controls are eliminating an innovation called 'guaranteed renewability,' which protects sick patients from high premiums and skimping. Obamacare has pushed BlueCross BlueShield of North Carolina to dismantle its guaranteed-renewability feature and transfer more than $100 million from sick to healthy customers."
When those price controls go marketwide in 2014, they will force insurers to avoid sick adults as well. Economists have shown that unless insurers avoid the sick, the price controls will put them out of business. Look for insurers to avoid, mistreat and dump the sick by marketing themselves only to healthy people, skimping on claims processing and customer service, and dropping benefits that sick people value — not because insurers are heartless, but because that is what Obamacare rewards.
The law's authors admitted as much when they included new subsidies and regulations (on marketing, claims payments and benefit design) to mitigate those perverse incentives."
"For example, three years before they even take effect, the marketwide price controls are eliminating an innovation called 'guaranteed renewability,' which protects sick patients from high premiums and skimping. Obamacare has pushed BlueCross BlueShield of North Carolina to dismantle its guaranteed-renewability feature and transfer more than $100 million from sick to healthy customers."
Why Derek Jeter and LeBron James Are Running for Florida | Jim Powell | Cato Institute: Commentary
Why Derek Jeter and LeBron James Are Running for Florida | Jim Powell | Cato Institute: Commentary: "These cases offer a reminder of the futility of trying to soak the rich — something President Obama wants to do by letting the Bush tax cuts expire for high-income earners. These people typically have skills that are in demand around the country and often around the world. They can live practically anywhere without impairing their ability to earn a lot of money. And so they will move somewhere else that is glad to leave their bank accounts alone."
Tax Hikes Not Needed to Balance the Budget | Daniel J. Mitchell | Cato Institute: Commentary
Tax Hikes Not Needed to Balance the Budget | Daniel J. Mitchell | Cato Institute: Commentary: "Washington insiders say that tax increases are unavoidable because deficits are too large. Since these often are the same people who supported 'Obamacare' and the so-called stimulus, their crocodile tears about red ink probably are not very sincere. But hypocrisy is not necessarily the same as inaccuracy, so let's look at whether it is possible to balance the budget without higher taxes."
"One approach would be to get rid of counterproductive forms of spending such as the Department of Agriculture, energy-subsidy programs, Department of Housing and Urban Development, Small Business Administration, Department of Education, National Endowment for the Arts, and Department of Transportation."
"For much of America's history, when such restraints were honored, federal spending was on average only 3 percent of economic output. If we did the same thing today, federal spending would be about $450 billion. We'd not only have a balanced budget; we'd have a giant surplus and could easily afford to abolish the income tax."
"Politicians simply need to reduce the rate at which spending is growing.
It's a simple matter of mathematics. The Congressional Budget Office estimates that tax revenue will grow by an average of 7.3 percent annually over the next 10 years. Reducing the budget deficit is easy — so long as politicians increase overall spending by less than that amount. And with inflation projected to be about 2 percent over the same period, this is an ideal environment for some long-overdue fiscal discipline."
"If spending is simply capped at the current level with a hard freeze, the budget is balanced by 2016. If we limit spending growth to 1 percent each year, the budget is balanced in 2017. And if we allow 2 percent annual spending growth — letting the budget keep pace with inflation, the budget balances in 2020."
"Milton Friedman was correct many years ago when he warned that, 'In the long run government will spend whatever the tax system will raise, plus as much more as it can get away with.'"
"One approach would be to get rid of counterproductive forms of spending such as the Department of Agriculture, energy-subsidy programs, Department of Housing and Urban Development, Small Business Administration, Department of Education, National Endowment for the Arts, and Department of Transportation."
"For much of America's history, when such restraints were honored, federal spending was on average only 3 percent of economic output. If we did the same thing today, federal spending would be about $450 billion. We'd not only have a balanced budget; we'd have a giant surplus and could easily afford to abolish the income tax."
"Politicians simply need to reduce the rate at which spending is growing.
It's a simple matter of mathematics. The Congressional Budget Office estimates that tax revenue will grow by an average of 7.3 percent annually over the next 10 years. Reducing the budget deficit is easy — so long as politicians increase overall spending by less than that amount. And with inflation projected to be about 2 percent over the same period, this is an ideal environment for some long-overdue fiscal discipline."
"If spending is simply capped at the current level with a hard freeze, the budget is balanced by 2016. If we limit spending growth to 1 percent each year, the budget is balanced in 2017. And if we allow 2 percent annual spending growth — letting the budget keep pace with inflation, the budget balances in 2020."
"Milton Friedman was correct many years ago when he warned that, 'In the long run government will spend whatever the tax system will raise, plus as much more as it can get away with.'"
"Trannie Mae" and Special Interests | Randal O'Toole | Cato Institute: Commentary
"Trannie Mae" and Special Interests | Randal O'Toole | Cato Institute: Commentary: "A real bank lends money for projects that are likely to cover their costs and repay the loans. Many of the projects Mr. Obama wants the new 'bank' to fund, including high-speed rail and rail transit, will not see a single dime; they won't cover their operating costs, much less the capital costs of the projects. So much of Trannie Mae's money will have to be in the form of grants, not loans."
"For example, the Federal Transit Administration's (FTA) New Starts program gives out billions of dollars each year to rail-transit projects using supposedly clear, analytical criteria. Those criteria include 'cost effectiveness' and 'mobility improvement' ratings. However, the FTA does not require transit agencies to compare the added efficiency of rail transit with alternatives, such as bus-rapid transit or simply building new highway lanes.
As a result, decisions about New Starts funding are highly subjective and subject to meddling by lawmakers. If powerful members of Congress find that a favored project is rated low by one or more criteria, they simply exempt the project from those criteria."
"For example, the Federal Transit Administration's (FTA) New Starts program gives out billions of dollars each year to rail-transit projects using supposedly clear, analytical criteria. Those criteria include 'cost effectiveness' and 'mobility improvement' ratings. However, the FTA does not require transit agencies to compare the added efficiency of rail transit with alternatives, such as bus-rapid transit or simply building new highway lanes.
As a result, decisions about New Starts funding are highly subjective and subject to meddling by lawmakers. If powerful members of Congress find that a favored project is rated low by one or more criteria, they simply exempt the project from those criteria."
Hooray, the Recession Is Over! - Robert P. Murphy - Mises Daily
Hooray, the Recession Is Over! - Robert P. Murphy - Mises Daily: "Rather, I am pointing out the virtual uselessness of the empirical approach when it comes to 'fine-tuning' the macroeconomy. Even if we had reason to believe that government policies could overcome the failings of the free market, such interventions would be as hopeless as those of an Earth surgeon operating on a Martian patient with a remote-controlled scalpel. The information lag would be enormous."
"According to the NBER, the US economy went through a severe recession from December 2007 to June 2009. Now it took the NBER until December 1, 2008 to announce that the economy was in a recession — a full year after it began (according to the same NBER). And then, with this week's announcement, the NBER announced that the economy had exited the recession, a full 15 months after the fact."
"Let's say you are running and then break a leg. You have to crawl now, but you develop that skill and are able to get from here to there. Are you in recovery from the accident? According to the NBER, yes — so long as you are crawling faster than when you first hit the ground in agony."
"According to the NBER, the US economy went through a severe recession from December 2007 to June 2009. Now it took the NBER until December 1, 2008 to announce that the economy was in a recession — a full year after it began (according to the same NBER). And then, with this week's announcement, the NBER announced that the economy had exited the recession, a full 15 months after the fact."
"Let's say you are running and then break a leg. You have to crawl now, but you develop that skill and are able to get from here to there. Are you in recovery from the accident? According to the NBER, yes — so long as you are crawling faster than when you first hit the ground in agony."
The Curse of Government Failure | Steve H. Hanke | Cato Institute: Commentary
The Curse of Government Failure | Steve H. Hanke | Cato Institute: Commentary: "Without the Fed pushing interest rates to artificially low levels, yield-chasing speculators, who employed carry trades and fantastic leverage, would have never seen the light of day. Yes, there were other government failures that contributed to various asset bubbles and associated instabilities in the real estate markets, for example. But, the primary enabler was the Fed and its ultra-accommodative monetary policy. Among other things, it was the Fed's monetary laxity that led to the fall of the dollar against the euro and the dramatic rise in commodity prices that climaxed in July 2008."
"$3.40 of lost output is associated with every dollar of government spending. So, the much touted fiscal multiplier is negative, not positive. This is a case — like many others in the government sphere — in which doing nothing would have been superior to doing something."
"there were over 115 government regulatory agencies for financial services before the crisis. Where were they as the Fed-induced credit mania built to a climax?"
"$3.40 of lost output is associated with every dollar of government spending. So, the much touted fiscal multiplier is negative, not positive. This is a case — like many others in the government sphere — in which doing nothing would have been superior to doing something."
"there were over 115 government regulatory agencies for financial services before the crisis. Where were they as the Fed-induced credit mania built to a climax?"
Monday, October 18, 2010
Drop Pretension to Supremacy | Benjamin H. Friedman and Christopher Preble | Cato Institute: Commentary
Drop Pretension to Supremacy | Benjamin H. Friedman and Christopher Preble | Cato Institute: Commentary: "Hawks and defense industry trade groups say this spending is essential to U.S. security. But much of Washington's military spending is geared toward defending others and toward the dubious proposition that global stability depends on U.S. military deployments.
If our military had less to do, the Pentagon could spend less — at least $1.22 trillion less over the next 10 years, according to a Cato Institute report released Tuesday.
Washington confuses what it wants from its military (global primacy or hegemony) with what it needs (safety)."
"Making large spending cuts without reducing military commitments is a recipe for overburdening service members. Nor should Washington embrace strategic restraint just for budgetary reasons. A force reduction strategy would make sense even without deficits, however, because it could enhance security."
If our military had less to do, the Pentagon could spend less — at least $1.22 trillion less over the next 10 years, according to a Cato Institute report released Tuesday.
Washington confuses what it wants from its military (global primacy or hegemony) with what it needs (safety)."
"Making large spending cuts without reducing military commitments is a recipe for overburdening service members. Nor should Washington embrace strategic restraint just for budgetary reasons. A force reduction strategy would make sense even without deficits, however, because it could enhance security."
Foolhardy Tax Hikes | Alan Reynolds | Cato Institute: Commentary
Foolhardy Tax Hikes | Alan Reynolds | Cato Institute: Commentary: "As puny as it is, the official $34 billion estimate of the revenue from Obama's crusade against high incomes is wildly optimistic. To begin with, it fails to take into account how taxpayers would react. To make matters much worse, if there are any adverse effects on the economy at all, the net effect would be to reduce, rather than increase, federal, state, and local tax receipts in 2011. Are these risks worth taking in the foolhardy hope of paying for nine days' worth of deficit?"
Conflict-of-Interest Bugaboo | Richard W. Rahn | Cato Institute: Commentary
Conflict-of-Interest Bugaboo | Richard W. Rahn | Cato Institute: Commentary: "George Soros, who gives even more money to the Democrats and left-leaning causes, is treated as a benevolent hero. Mr. Soros made his money in financial bets against the success of government policies (i.e. shorting currencies); he was betting on economic failure and, in one case at least, with inside information. The Kochs, by contrast, have companies that produce products that are useful to people, such as carpets and paper towels. The Kochs have a vested interest in the success of the American and world economy. Too bad Mr. Soros cannot say the same."
"if you omit from your sample all of those environmental scientists who are on a government tab — salary or research grant — and those relatively few environmental scientists who are on the tab of an oil company or some other vested private industry, you are likely to have a much smaller ratio between those who agree versus those who disagree about global warming. If you are a professor at a state university and write a research paper showing that global warming is not a problem, how long do you think your government funding will remain?"
"The political class and the media decry the growth of lobbyists in Washington. Yet why is it so hard to understand that as government increasingly gives away more money and dispenses more favors, it attracts greater numbers looking for those benefits?"
"if you omit from your sample all of those environmental scientists who are on a government tab — salary or research grant — and those relatively few environmental scientists who are on the tab of an oil company or some other vested private industry, you are likely to have a much smaller ratio between those who agree versus those who disagree about global warming. If you are a professor at a state university and write a research paper showing that global warming is not a problem, how long do you think your government funding will remain?"
"The political class and the media decry the growth of lobbyists in Washington. Yet why is it so hard to understand that as government increasingly gives away more money and dispenses more favors, it attracts greater numbers looking for those benefits?"
More Proof We Can't Stop Poverty By Making It More Comfortable | Michael D. Tanner | Cato Institute: Commentary
More Proof We Can't Stop Poverty By Making It More Comfortable | Michael D. Tanner | Cato Institute: Commentary: "Combined, these 122 programs spent more than $591 billion in 2009, and are projected to cost even more this year.
That amounts to $14,849 for every poor man, woman and child in America. Given that the poverty line is $10,830, it would have been cheaper just to mail every poor person a check for $11,000."
"We focus far too much on making poverty more comfortable, and not enough on creating the prosperity that will get people out of poverty.
Observers have known for a long time that the surest ways to stay out of poverty are to finish school, not get pregnant outside marriage and get a job, any job, and stick with it."
"An enormous amount of evidence and experience shows that private charities are far more effective than government welfare programs.
While welfare provides incentives for counterproductive behavior, private charities can use their aid to encourage self-sufficiency, self-improvement, and independence. Private charities can individualize their approaches and target specific problems that are holding people in poverty."
That amounts to $14,849 for every poor man, woman and child in America. Given that the poverty line is $10,830, it would have been cheaper just to mail every poor person a check for $11,000."
"We focus far too much on making poverty more comfortable, and not enough on creating the prosperity that will get people out of poverty.
Observers have known for a long time that the surest ways to stay out of poverty are to finish school, not get pregnant outside marriage and get a job, any job, and stick with it."
"An enormous amount of evidence and experience shows that private charities are far more effective than government welfare programs.
While welfare provides incentives for counterproductive behavior, private charities can use their aid to encourage self-sufficiency, self-improvement, and independence. Private charities can individualize their approaches and target specific problems that are holding people in poverty."
Pelosi's False Tax Choice | Michael D. Tanner | Cato Institute: Commentary
Pelosi's False Tax Choice | Michael D. Tanner | Cato Institute: Commentary: "Speaker Pelosi is presenting us with a false choice: higher taxes or more debt. Spending cuts just aren't part of her lexicon."
The Empirical Case against Government Stimulus - Robert P. Murphy - Mises Daily
The Empirical Case against Government Stimulus - Robert P. Murphy - Mises Daily: "What's really amazing about the [European Central Bank] piece is that it stressed that spending cuts were a much better way of closing a budget hole than raising taxes."
"Our analysis is based on new data on forty-four countries spanning about two hundred years. The dataset incorporates over 3,700 annual observations covering a wide range of political systems, institutions, exchange rate arrangements, and historic circumstances. Our main findings are: First, the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies."
"The anti-Keynesians point to actual success stories as evidence of the potency of their policies. The Keynesians, in contrast, point to awful economies and claim that they'd be even worse were it not for the Keynesian 'medicine.'"
"Our analysis is based on new data on forty-four countries spanning about two hundred years. The dataset incorporates over 3,700 annual observations covering a wide range of political systems, institutions, exchange rate arrangements, and historic circumstances. Our main findings are: First, the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies."
"The anti-Keynesians point to actual success stories as evidence of the potency of their policies. The Keynesians, in contrast, point to awful economies and claim that they'd be even worse were it not for the Keynesian 'medicine.'"
Friday, October 15, 2010
Little Bang for the Buck | Michael D. Tanner | Cato Institute: Commentary
Little Bang for the Buck | Michael D. Tanner | Cato Institute: Commentary: "All together, the federal government spent more than $591 billion in 2009 on means-tested or anti-poverty programs, and will undoubtedly spend even more this year. That amounts to $14,849 for every poor man, woman and child in America. Given that the poverty line is just $10,830, we could have mailed every poor person in America a check big enough to lift them out of poverty — and still saved mone"
Farmer's daughter disarms terrorist and shoots him dead with AK47
Farmer's daughter disarms terrorist and shoots him dead with AK47 - Telegraph: "His daughter was hiding under a bed when she heard him crying as the gunmen thrashed him with sticks. According to police, she ran towards her father’s attacker and struck him with an axe. As he collapsed, she snatched his AK47 and shot him dead.
She also shot and wounded another militant as he made his escape."
She also shot and wounded another militant as he made his escape."
The Case for a 'Repeal Amendment' | Randy Barnett and William J. Howell | Cato Institute: Commentary
The Case for a 'Repeal Amendment' | Randy Barnett and William J. Howell | Cato Institute: Commentary: "Its text is simple:
'Any provision of law or regulation of the United States may be repealed by the several states, and such repeal shall be effective when the legislatures of two-thirds of the several states approve resolutions for this purpose that particularly describe the same provision or provisions of law or regulation to be repealed.'"
"it allows thousands of democratically elected representatives outside the Beltway to check the will of 535 elected representatives in Washington, D.C.
Congress could re-enact a repealed measure if it really feels that two-thirds of state legislatures are out of touch with popular sentiment. And congressional re-enactment would require merely a simple majority. In effect, with repeal power the states could force Congress to take a second look at a controversial law."
'Any provision of law or regulation of the United States may be repealed by the several states, and such repeal shall be effective when the legislatures of two-thirds of the several states approve resolutions for this purpose that particularly describe the same provision or provisions of law or regulation to be repealed.'"
"it allows thousands of democratically elected representatives outside the Beltway to check the will of 535 elected representatives in Washington, D.C.
Congress could re-enact a repealed measure if it really feels that two-thirds of state legislatures are out of touch with popular sentiment. And congressional re-enactment would require merely a simple majority. In effect, with repeal power the states could force Congress to take a second look at a controversial law."
Thursday, October 14, 2010
With Presidential Drones, Who Needs Judges? | Nat Hentoff | Cato Institute: Commentary
With Presidential Drones, Who Needs Judges? | Nat Hentoff | Cato Institute: Commentary: "This case concerns the executive's asserted authority to carry out 'targeted killings' of U.S. citizens suspected of terrorism far from any field of armed conflict."
"Individuals, including U.S. citizens, are added to the ("kill") lists based on executive determinations that secret criteria have been satisfied. Executive officials (Leon Panetta and Robert Gates as well) are invested with sweeping authority to impose extrajudicial death sentences in violation of the Constitution and international law."
"Individuals, including U.S. citizens, are added to the ("kill") lists based on executive determinations that secret criteria have been satisfied. Executive officials (Leon Panetta and Robert Gates as well) are invested with sweeping authority to impose extrajudicial death sentences in violation of the Constitution and international law."
'A Nation of Dodos' | Michael D. Tanner | Cato Institute: Commentary
'A Nation of Dodos' | Michael D. Tanner | Cato Institute: Commentary: "But the liberal contempt for voters that is bubbling to the surface this year is actually reflective of something much more significant. The reality is that much of contemporary liberal policy is based on the idea that Americans are just too dumb or too venal to be allowed to make decisions about their own lives. They must instead rely on a benevolent, all-knowing government to make those decisions for them.
The new health-care law provides a prime example. Should people be able to decide whether or what kind of health insurance they buy? Of course not. They need to be coerced into buying the health-insurance plan that the government thinks is best. If you leave decisions about treatment up to patients and doctors, they will either go untreated or waste valuable resources. That is why the government needs to inject itself, substituting its judgment for that of doctors and patients."
The new health-care law provides a prime example. Should people be able to decide whether or what kind of health insurance they buy? Of course not. They need to be coerced into buying the health-insurance plan that the government thinks is best. If you leave decisions about treatment up to patients and doctors, they will either go untreated or waste valuable resources. That is why the government needs to inject itself, substituting its judgment for that of doctors and patients."
Don't Blame High-Frequency Trading | Alan Reynolds | Cato Institute: Commentary
Don't Blame High-Frequency Trading | Alan Reynolds | Cato Institute: Commentary: "By pushing interest rates so ridiculously low on Treasury bills and bonds, the Federal Reserve is subsidizing HFT and other questionable investment strategies at the expense of prudent savers who are being denied any positive real return on safe and liquid assets."
Friday, October 08, 2010
ObamaCare Extortion | Michael D. Tanner | Cato Institute: Commentary
ObamaCare Extortion | Michael D. Tanner | Cato Institute: Commentary: "Faced with the fact that the new health-care law was driving up insurance premiums, Health and Human Service Secretary Kathleen Sebelius warned that the administration would have 'zero tolerance' for anyone who blamed them for those price hikes.
Insurance companies that persist in telling the truth could face dire consequences. 'We will not stand idly by as insurers blame their premium hikes ... on the requirement that they provide consumers with basic protections,' she wrote in a letter to the insurance industries' trade association."
Insurance companies that persist in telling the truth could face dire consequences. 'We will not stand idly by as insurers blame their premium hikes ... on the requirement that they provide consumers with basic protections,' she wrote in a letter to the insurance industries' trade association."
Gun Training Report #59 Gun Control Has Killed 170 Million People
Gun Training Report #59 Gun Control Has Killed 170 Million People: "“If we can save just ONE life by getting guns off the street, then it is worth passing stricter gun control…”
Well, the next time you hear that from anybody, I want you to respond with: “Over 170 million people would disagree with you… if they could. You can't talk with them, because they are dead! They were killed by their own governments after strict gun control disarmed them.”"
Well, the next time you hear that from anybody, I want you to respond with: “Over 170 million people would disagree with you… if they could. You can't talk with them, because they are dead! They were killed by their own governments after strict gun control disarmed them.”"
Gun Training Report #60 40,000 Lives Lost Per Year Must Be Worth It...
Gun Training Report #60 40,000 Lives Lost Per Year Must Be Worth It...: "If we are going allow 40,000 people every year to die in automobile accidents, just so that we can drive to the supermarket, manage our two hour commute to and from work, or enjoy a nice Sunday drive down the coast, shouldn't we be willing to accept SIGNIFICANTLY FEWER deaths related to gunfire in exchange for the ability to protect ourselves, our loved ones, our community, and our country?"
IMF warns countries against currency wars - FoxNews.com
IMF warns countries against currency wars - FoxNews.com: "He says it would be a major mistake for countries to unfairly depress the value of their currencies to boost their exports"
Depressing a currency hurts the citizens of that country because it causes imports to be more expensive and therefore increases the cost of living. IMF acts as if depressing a currency only helps a country. :-/
Depressing a currency hurts the citizens of that country because it causes imports to be more expensive and therefore increases the cost of living. IMF acts as if depressing a currency only helps a country. :-/
IMF warns countries against currency wars - FoxNews.com
IMF warns countries against currency wars - FoxNews.com: "He says it would be a major mistake for countries to unfairly depress the value of their currencies to boost their exports"
Depressing a currency hurts the citizens of that country because it causes imports to be more expensive and therefore increases the cost of living. IMF acts as if depressing a currency only helps a country. :-/
Depressing a currency hurts the citizens of that country because it causes imports to be more expensive and therefore increases the cost of living. IMF acts as if depressing a currency only helps a country. :-/
California Board Reportedly Overestimated Pollution by 340 Percent to Pass Landmark Air Standards - FoxNews.com
California Board Reportedly Overestimated Pollution by 340 Percent to Pass Landmark Air Standards - FoxNews.com: "California regulators reportedly are planning to significantly weaken the state’s landmark clean air standards after discovering they miscalculated pollution levels by 340 percent."
How can you trust their recommendations when they are off that much?!?
How can you trust their recommendations when they are off that much?!?
Wednesday, October 06, 2010
Fiscal Euphemisms - Robert P. Murphy - Mises Daily
Fiscal Euphemisms - Robert P. Murphy - Mises Daily: "Now we have 'budget cuts' which are not cuts, but rather substantial increases over the previous year's expenditures.
'Cut' became subtly but crucially redefined as reducing something else. What the something else might be didn't seem to matter, so long as the focus was taken off actual dollar expenditures. Sometimes it was a cut 'in the rate of increase,' other times it was a cut in 'real' spending, at still others it was a percentage of GNP, and at yet other times it was a cut in the sense of being below past projections for that year."
"government economists have been doing their part as well to try to sugar-coat the pill of tax increases. They never refer to these changes as 'increases.' They have not been increases at all; they were 'revenue enhancement' and 'closing loopholes.' The best comment on the concept of 'loopholes' was that of Ludwig von Mises. Mises remarked that the very concept of 'loopholes' implies that the government rightly owns all of the money you earn, and that it becomes necessary to correct the slipup of the government's not having gotten its hands on that money long since."
"Feldstein is claiming that, in the categories of how the federal government spends money, the big ones are the military, Social Security, and Medicare. But after those whoppers, the bulk of 'government spending' — according to Feldstein and endorsed by Mankiw — are things like tax deductions on mortgage interest, or tax credits based on how many children a person has.
In other words, Feldstein is completely obliterating the distinction between (a) the government handing Paul $1,000 that it has previously taken from Peter, and (b) the government refraining from taking $1,000 from Paul that he earned. Either way, from Feldstein's viewpoint, that is a government expenditure."
"It is an abuse of language to say that a tax hike is 'equivalent' to a spending cut. With equal justification, Timothy Geithner could defend the hated TARP bank bailout as an $800 billion 'tax cut.' Or, proponents of the wars in Afghanistan and Iraq could refer to them as trillion-dollar-plus tax cuts. After all, Goldman Sachs, Halliburton, and other major corporations ended up with more money than they otherwise would have had, so these programs were basically tax cuts, right?"
'Cut' became subtly but crucially redefined as reducing something else. What the something else might be didn't seem to matter, so long as the focus was taken off actual dollar expenditures. Sometimes it was a cut 'in the rate of increase,' other times it was a cut in 'real' spending, at still others it was a percentage of GNP, and at yet other times it was a cut in the sense of being below past projections for that year."
"government economists have been doing their part as well to try to sugar-coat the pill of tax increases. They never refer to these changes as 'increases.' They have not been increases at all; they were 'revenue enhancement' and 'closing loopholes.' The best comment on the concept of 'loopholes' was that of Ludwig von Mises. Mises remarked that the very concept of 'loopholes' implies that the government rightly owns all of the money you earn, and that it becomes necessary to correct the slipup of the government's not having gotten its hands on that money long since."
"Feldstein is claiming that, in the categories of how the federal government spends money, the big ones are the military, Social Security, and Medicare. But after those whoppers, the bulk of 'government spending' — according to Feldstein and endorsed by Mankiw — are things like tax deductions on mortgage interest, or tax credits based on how many children a person has.
In other words, Feldstein is completely obliterating the distinction between (a) the government handing Paul $1,000 that it has previously taken from Peter, and (b) the government refraining from taking $1,000 from Paul that he earned. Either way, from Feldstein's viewpoint, that is a government expenditure."
"It is an abuse of language to say that a tax hike is 'equivalent' to a spending cut. With equal justification, Timothy Geithner could defend the hated TARP bank bailout as an $800 billion 'tax cut.' Or, proponents of the wars in Afghanistan and Iraq could refer to them as trillion-dollar-plus tax cuts. After all, Goldman Sachs, Halliburton, and other major corporations ended up with more money than they otherwise would have had, so these programs were basically tax cuts, right?"
Monday, October 04, 2010
Why the Bush Tax Cuts Worked | Jeffrey A. Miron | Cato Institute: Commentary
Why the Bush Tax Cuts Worked | Jeffrey A. Miron | Cato Institute: Commentary: "Capital is mobile: when it is taxed heavily here, it flees somewhere else, meaning lower investment and employment in the United States. And because capital income taxes discourage investment or drive it overseas, they generate little if any tax revenue."
"their real objection is that the Bush tax cuts (allegedly) favor the wealthy. This claim is true in part; lower tax rates on the high income earners are obviously beneficial for those earners. Yet this is only part of the story. To stimulate work, saving, and investment, tax cuts have no choice but to favor the taxpayers who respond most to taxes, as well as those likely to save and invest. That means high income earners. So policy must accept some inequality in exchange for more efficiency."
"their real objection is that the Bush tax cuts (allegedly) favor the wealthy. This claim is true in part; lower tax rates on the high income earners are obviously beneficial for those earners. Yet this is only part of the story. To stimulate work, saving, and investment, tax cuts have no choice but to favor the taxpayers who respond most to taxes, as well as those likely to save and invest. That means high income earners. So policy must accept some inequality in exchange for more efficiency."
Are Rising Imports a Boon or Bane to the Economy? | Daniel Griswold | Cato Institute: Commentary
Are Rising Imports a Boon or Bane to the Economy? | Daniel Griswold | Cato Institute: Commentary: "More than half of what we import consists of goods consumed by producers — capital machinery, raw materials, parts and other intermediate inputs. Those imports help us produce more, not less. This is one reason why, over the past year, imports of manufactured goods have been rising along with domestic manufacturing output.
In the long run, imports spur growth by forcing domestic producers to be more efficient and productive. Like competition generally, imports weed out the less-productive domestic producers, leaving the market to more-competitive U.S. companies."
"Obsession with the trade deficit also ignores the fact that the dollars we spend on imports quickly return to the United States. If they are not used to buy our goods and services, they are spent on assets, such as real estate, stocks and Treasury bonds. This inflow of capital also helps to fuel growth by keeping interest rates down and providing capital to build factories and expand output."
"Compared with a perfectly proportional correlation of 100 percent, the correlation between imports and GDP is a strongly positive 62 percent.
Politicians myopically focus on exports, but the correlation between rising exports and rising GDP is actually weaker, at 45 percent, than the connection between imports and GDP"
In the long run, imports spur growth by forcing domestic producers to be more efficient and productive. Like competition generally, imports weed out the less-productive domestic producers, leaving the market to more-competitive U.S. companies."
"Obsession with the trade deficit also ignores the fact that the dollars we spend on imports quickly return to the United States. If they are not used to buy our goods and services, they are spent on assets, such as real estate, stocks and Treasury bonds. This inflow of capital also helps to fuel growth by keeping interest rates down and providing capital to build factories and expand output."
"Compared with a perfectly proportional correlation of 100 percent, the correlation between imports and GDP is a strongly positive 62 percent.
Politicians myopically focus on exports, but the correlation between rising exports and rising GDP is actually weaker, at 45 percent, than the connection between imports and GDP"
Economic Malpractice | Richard W. Rahn | Cato Institute: Commentary
Economic Malpractice | Richard W. Rahn | Cato Institute: Commentary: "there was no case where a big increase in government spending — correctly measured as a percentage of gross domestic product — led to both higher private consumption and significant job growth"
"a prudent person responds to tax and regulatory uncertainty by taking fewer risks, such as expanding the business rapidly or hiring new people."
"Government can create government-sector jobs at the expense of private-sector jobs, but not at a higher real wage — which is one reason why a growing welfare state and/or a socialist economy always fail."
"a prudent person responds to tax and regulatory uncertainty by taking fewer risks, such as expanding the business rapidly or hiring new people."
"Government can create government-sector jobs at the expense of private-sector jobs, but not at a higher real wage — which is one reason why a growing welfare state and/or a socialist economy always fail."
Campaign For Liberty — Taxing and Spending
Campaign For Liberty — Taxing and Spending: "the President, for the umpteenth time, described leaving the existing tax rates alone as 'spending'. He said we had 'better things to spend our money on' than not raising taxes.
Did he really say 'our money'? Oh yes, he did. That's what they call your paycheck these days over at the White House; and you keeping what you earned is now considered foolish spending."
Did he really say 'our money'? Oh yes, he did. That's what they call your paycheck these days over at the White House; and you keeping what you earned is now considered foolish spending."
Campaign For Liberty — Tax The Rich
Campaign For Liberty — Tax The Rich: "We will not earn more when [the rich] keep less. Taxing them is a lose/lose proposition, which unfortunately has become this administration's signature move.
Wealth is neither moral nor immoral; it is simply the difference between what is produced and what is consumed over a lifetime. People who spend more than they earn become poorer, people who earn more than they spend become richer. With the obvious exceptions of crooks and shnooks, rich people only get that way by providing us with the things we want. Only a fool - or a jealous socialist - would want to punish someone for that."
Wealth is neither moral nor immoral; it is simply the difference between what is produced and what is consumed over a lifetime. People who spend more than they earn become poorer, people who earn more than they spend become richer. With the obvious exceptions of crooks and shnooks, rich people only get that way by providing us with the things we want. Only a fool - or a jealous socialist - would want to punish someone for that."
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